Chapter 3. This Stock Is So Cheap! the Low Price-Earnings Story
Jeremy was a value investor, and he had disdain for investors who chased growth stocks and paid exorbitant prices for them. Reading Forbes one day, Jeremy was excited to see the results of an academic study that showed that you could beat the market by buying stocks with low price-earnings ratios, an approach highly favored by other value investors. Getting on Yahoo! Finance, Jeremy looked for stocks that traded at price-earnings ratios less than 8 (a number he had heard on CNBC was a good rule of thumb to use for low PE stocks) and was surprised to find dozens. Not having the money to invest in all of them, he picked the first 20 stocks and bought them.
In the year ...
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